Zimbabwe issued new $2, $5, $10 and $20 bond notes, and is now preparing to issue a $50. So is this the beginning of a new hyperinflation cycle or has Zimbabwe been able to stabilize its economy and its currency?
Source: RBZ
Zimbabwe Inflation
Most people are very aware of the hyperinflation experienced by the country for the last 20 years. The economic distress led to extreme poverty and shortages of food, electricity and other basic necessities. Zimbabwe’s currency denominations added zeroes at an fast rate, ultimately leading to the famous (or infamous) 100 Trillion Dollar banknote.
Source: Banknote World
From 2009 through to 2019, the country used several foreign currencies to stabilize its economy. These efforts failed. In 2019, Zimbabwe issued Bond Notes backed by foreign-guaranteed securities. But the country has still suffered from triple digit inflation and economic contraction. COVID has not helped.
Possible Banknotes for the Future
The Reserve Bank (RBZ) will soon introduce $50, $100 and $200 denominations to address cash shortages and transaction efficiency. The $50 is going to start circulating soon. Given that a loaf of bread costs nearly $100, it would seem that the bank needs to get even higher denominations out soon.
Source: RBZ
The RBZ and foreign entities including the IMF have intervened to try to stabilize the currency, but inflation continues to rage. But the bank believes that there is still much of the actual transactions that are occurring in US Dollars, and they hope that if the ZWL dollars can be stabilized that more transactions will occur in local currency and the confidence in the Zimbabwe Dollar will improve.
Poor weather and COVID have conspired to hurt Zimbabwe’s economic recovery. It is unclear if the country will be able to establish a stable economy or if we are going to see a 2022 version of the 100 trillion-dollar denomination. Let’s hope that it is the former, as the latter would lead to even more hardship for the Zimbabwe people.
